J Sainsbury - Becoming more convenient

Tuesday, Sep 15 2009 by

Having overseen the eighteenthsuccessive quarter of sales growth at supermarket giant J Sainsbury (LSE, SBRY), it is little wonder that group CEO Justin King is being labelled the Fabio Capello of the retail world. 

 The company’s dynamism has meant that sales (unlike for most) have continued to grow during the recession thanks in part to the increased roll out of the economical ‘Basics’ range.  However, with the economic climate brightening, other factors rather than price will determine consumer behaviour.  And having made a successful investment in price reductions management’s focus has now shifted to an aggressive expansion of locations which the recently announced £445 million capital raising will facilitate.

In our view, the placing is an astute move.  With plans for fifty new stores in 2009/10 and a further 100 stores in 2010/11, the placing has fortified the group’s balance sheet and has enabled management to increase planned capital spending in the next two years by 25% to £2 billion. 

If recent performance is anything to go by, more space should translate to greater profits.

During the 12 weeks to 13 June 2009 like-for-like sales climbed 7.8 per cent excluding fuel and VAT (the rate of which changed between periods).   Importantly, customer numbers increased to over 18.5 million per week and basket size has grown as the company’s investment in price and bolstering product ranges paid dividends.

Sainsbury’s expansion will place yet further pressure on rival Tesco, whose market dominance has been eroded of late by its rivals Asda, Sainsbury’s and Morrison’s.  In their most recent battles, Sainsbury’s has regularly secured the upper hand over Tesco and its 7.8 per cent growth eclipsed Tesco’s 4.3 per cent over the same period.  We see this trend continuing and believe Tesco will face the most robust challenge since it became the industry’s dominant player 15 years ago.   

Encouragingly, 40 per cent of Sainsbury&rsqu

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


Fat Prophets has made every effort to ensure the reliability of the views and recommendations expressed in its reports. Fat Prophets research is based upon information known to us or which was obtained from sources which we believed to be reliable and accurate at time of publication. However, like the markets, we are not perfect. This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each recommendation for their own specific circumstances and realise that not all investments will be appropriate for all subscribers. To the extent permitted by law, Fat Prophets and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Fat Prophets hereby limits its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply. 

Do you like this Post?
0 thumbs up
0 thumbs down
Share this post with friends

J Sainsbury plc is engaged in grocery-related retailing and retail banking. The Company's segments include Retailing; Financial services, and Property investments. The Retailing segment is engaged in the operation of supermarkets and convenience. The Financial services segment includes the operations of Sainsbury's Bank plc (Sainsbury's Bank). The Property investments segment includes the Company's joint ventures with the British Land Company PLC and Land Securities Group PLC. The Company has approximately 2,000 food suppliers and over 1,000 non-food suppliers. The Company offers over 15,000 own-brand products and has approximately 770 convenience stores. The Company offers groceries under various categories, such as fruit and veg, meat and fish, dairy, chilled, bakery, frozen, food cupboard, drinks, health and beauty, baby, household, pet and home. Sainsbury's Bank provides a range of products, including insurances, credit cards, savings and loans. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

  Is J Sainsbury fundamentally strong or weak? Find out More »

What's your view on this article? Log In to Comment Now

You can track all @StockoChat comments via Twitter

About Fat Prophets

Fat Prophets

Founded in 2000, Fat Prophets has grown to become one of the world’s leading independent stock market research houses.When we launched with our quirky, yet hopefully memorable name, we saw a finance industry that was out of touch with investors needs. A new breed of Do-It-Yourself investors was entering the market and they needed stock market research they could trust. So we set ourselves a mission that is as true today as the day we launched: our mission is to make your investments as FAT as possible. We achieve our mission by advising our Members exactly what share to buy, at what price and when to sell to maximise their potential returns. more »

Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis